2004 D e c i sion s O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit

11-10-2004 

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P r e c e de n t i al or N on-P r e c e de n t i al : P r e c e de n t i al

D ocke t N o . 03-3575

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Thi s de c i sion i s br ou gh t t o you for f r e e a nd ope n a c c e s s b y the O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit at V i l l a no va U nive r sit y S choo l of L a

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IN T HE UNI TED ST ATES C OURT OF

APPEALS FO R T HE TH IRD CIR CU IT

____________
No. 03-3575

____________ JOHN DEPENBROCK,
Appellant

v.
CIGNA CORP.; CIGNA

PENSION PLAN

____________ Appeal from the Unit ed State s District

Cou rt the E astern Distric t of P enns ylvania D.C. No.: 01- cv-06161 Distric t Ju dge: Honorabl e Robert F. Ke lly

____________ Argued: September

21, 2004

Before: McKEE, ROSEN N and WEIS,

Circuit Judges

(Fil ed: November 10, 2004)

Stephen R. Bru ce, Esq. (A rgued) 805 15th Street, N.W. Washington, DC 20005-2271

W illiam M . O'C onn ell, III, E sq. Barb in, La uffe r & O 'Con nell 608 Huntingdon Pike Rockledge, PA 19046 Counsel for Appell ant

Joseph J. Costell o, Esq. (Argued) Tamsin J. Newman Morgan , Lewis & B ockius 170 1 M arket S treet Philadelphia, PA 19103

Counsel for Appell ee

____________
OPINI ON OF THE COURT

____________
ROSENN , Circ uit Judge. This case is a by- product of corp orate Am erica’s recent effort to curb costs by, inter alia , scal ing backth e bene fits provided under pension plans. John Dep enbrock (“Dep enbrock ”) c l ai ms that his emplo yer, CIGN A C orpora t ion (“CIG NA ”), violat ed the E mployee Retire ment Income Secu ri ty Ac t (“ER ISA” ), 29 U.S.C. § 1 001 , e t seq. , by denying him b enefits without t he requir ed notice and lawful amendment t o the pension plan . Depenbrock al so all eges that CIGNA violat ed ERISA by failing to provide hi m an opportuni ty to revi ew pertinentdocuments rel atingto his de nialof-b enefits clai m, and bybreachi ng the fiduciary duty

owed as plan adm inistrator. The Dis tri ct Court gr ant e d CIG NA ’s motion for s ummary judgment and den ie d Dep enb ro ck’ s c ro ss mo tion s. We reverse the sum mary jud gm ent in f avorof CIG NA an d r emand w i t h directions to en tersummary j udgment for De pen bro ck. I. In 1983, Depenbrock began2

working at CIGNA. At thattime, CIG NA providedits employees w i th a gener ous tradi tionalpension pl an. 1 On November 4, 1997, presumably to cut cost s, CIG NA proposedame ndm ents to its plan that were to become effective January 1, 199 8

. Ac cording to the amendments, y ounge r , sho rt-term emp loyees w ere to b e trans ferredto a more mod est “cash balance” pension for mula (“the New Plan”), 2 whi le lo ng- te rm e mp lo yees – such as De penbrock – woul d “grandfather” in under t he tradi tionalplan (“the Old Plan”) and r ecei ve higher be nefits. 3 In addition, t he proposed pl an amendment included a “Reh ire R ule” which stat ed that

long-t erm empl oye es who le ft C IGNA and w ere re- employe d afte r December 31, 1997, would not particip ate in the Old Plan upon ret urn but inst ead wo ul d be tra nsfe rred im med iately into the New Plan. For reas ons unknown, CIG NA did n ot formal ly adopt the amendment and “ Reh ire Ru le” un til December 21, 1998, when CIGNA’s CEO executeda writt en adopti on in accor dance with the am endm ent pro cedu re set fo rth in the p lan. On J anu ary

2, 1998, Depenbr ock resi gned from CIGNA to work for anot her compa ny

. However, Depenbrock was rehir ed at CIGNA on November 30, 1998. Depenbrock claim s that the pens ion ru le in effectwhen he was rehired provide d th at he imme diately re sum e parti cipat ion under the Ol d P lan. D epen broc k bas es this assertion on the fact that t he proposed amendment to CIG NA’ s pla n had not y et been f o rmally adopted when he was rehir ed on November 30, 1998

. Because the for mal ado pt io n date came twe nty -t wo da ys after

Depenbrock ret

urned to work, Depenbrock assert s that the amendment does not ap ply to hi m. To hold other wise, Depenbrock argues, would am ount to an impe rmissib le retr oacti ve reduct ion of his 1 A traditional pe nsion pl an is a def ined benefit plan that “pay s an annuit y bas ed on th e retiree ’s earn ings h istory, usua lly the most r ecent or

highest paid y ears, and the number of comple ted y ears of s ervice to the c ompany. ” Campbell v. Ban kBo st on, N. A. , 327 F.3d 1, 4 (1st Cir. 2003) . The CIGNA pension plan was determine d by factoring i n the retiree’s credit ed years of ser vice, 2% of his 36-mont

h average compensation at the time of reti rement, minus a Social Sec urity offse t.

2 “Cash balance” plans “guar antee an emp loyee a ce rtain co ntributio n leve l,

us ua lly a n a nn ua l p er ce nt ag e o f s ala ry, plus a fi xed percent age of int erest .” Cam pbell , 327 F.3d at 4. CIG NA ’s “cash bal ance” plan off ered employ ees an account bal ance to which was cr edite d an amount based on el igibl e earni ngs and credit ed years of ser

vice, as well as an
ann ual d ecla red inter est ra te. 3 CIGNA refers to the Old Pl an as “Part A” and the New Plan as “Part B. ” We e mpl oy

th e t erms “ Old ” a nd “New” in order to ori ent the plans ch ro no lo gi ca lly.3

rights. 4 CIG NA counters that although t

he amendment wa s not form ally adop ted un til December 21, 1998, the announcementof the proposed changes on November 4, 1997, coupled with the CEO’s conduct subsequent

to the a nno unce men t, serve d to implementand r etroac tively rati f y t he amendment as of November 4, 1997

. As such, CIG NA asserts th a t the e ffecti ve date of the amendm ent was J anuary 1, 1998 – the effective dat e specif ied in t he inter nal announcementof

the am endm ent. Bec ause Depenbrock res igned fro m CIG NA on January

2, 1998, on e d ay after the specifi ed effective date of the “Re hire Ru le,” CIGNA contends t he “Rehire Rule ” lawfully appli es. Depenbrock f

iled suit

against CIG NA in the Eas tern D ist rict of Pen nsylvan ia on December 11, 2001, f or wrongful den ia l of ERISA benefits, disclosure vio la tions , and brea ch of fiduciary d uty . During di scov ery , Depenbroc k move d t o co mp el th e producti on of fifty -two documents t hat CIG NA clai med were protec ted by the attor ney- clie nt privilege and/o r “work prod uct” doct

ri ne. Th e D istrict Court invit ed C I GNA to submit an ex parte memorandum in support of its c laim s. Afterconducti ng an in camera re vi ew, the Di stri ct Cou rt denied D epenb rock’s motion to compe l without off ering any expl a nationfor it s findi ng. The District Cou rtheld oralargument oncross moti ons for summary j udgment and o n Jul y 31, 2003, issued

an opinion and order gr anting

sum m ary ju dgm e n t t o CI GNA

. De pen bro ck tim ely ap pea led.

II. This case havi ng aris en under ERI SA, the D istrict Co urt had s ubject matter juri sdict ion pursuant to 28 U.S .C. § 1331 and 29 U.S.C. § 1132. This Cou r t has appell ate j urisdi ction pur suant t o 28 U.S .C. § 1291 over the f inal j udgm e nt of the Dis trict C our t. Berger v. Edgewate r Steel Co. , 91 1 F.2d 9 11, 916 (3 d Cir. 1990). We rev iew de novo the Dist rict Cou rt’s ordergr antin g CI GNA ’s moti on for sum ma ry judg me nt. Bixler v. Cen t. Pa. Team sters Health & Welfare Fund , 12 F.3d 1292, 12 97 (3 d Cir. 1993) . Motions for summary judgment must be gran ted if there is no genuine i ssue as to any materi al fa ct and the m ovin g par ty is entitled to judgmentas a ma tter o f law

. Fed. R. Civ. P. 56(c ); Ryan by

Capria-Ry an v. Fed. Express Corp. , 78 F.3d 123 , 125 (3d Cir. 1996). Depenbrock i niti ally rais ed five issues on app eal: 1) whe ther t he “ Re hire Rule” was effe ctive January 1, 1998; 2) whetherth e plan amendment adopt ed Dece mb er21, 1998, c an be given retr oacti ve ef

fe ct ; 3 ) wh ethe r CI GNA compliedw i th ERISA’s noti ce and disclosure require men ts; 4) whether Dep enbrock ’s failure -to-pro duce claim againstC IG NA fa il s a s amat te r o f l aw; 4 One of CIGN A’s actuaries es timat ed that t ransfer ring Depenbrock from the Old Plan to the N ew Plan will res ult in his l osing $800, 000 in benefi ts, assuming he co ntinue d to w ork for C IGN A u ntil age 55.4

and 5) whether t

he “fiduci ary

excepti on” to the atto rney-clien t privile ge com pels CIG NA to pro duce fifty-two osten sibly privil ege d documents. Disposition of the first tw o is sues rende rs dis cussion of the remaini ng i ss ue s unn ec es sar y

. We theref ore t urn to t

he effective date of t

he amendment an d a na lyz e w hether t he

am en dm en t m ay b e a pp lie d r etr oa cti ve ly. A. Effective Date of the Amendment Befo re turn in g t o the mer it s, we first set for th some backgroundon E RIS A. “Erisa does not cr eate any s ubstant ive

en t itl ement to em plo yer-pr ovi ded

. . . welfare benefit s. Employ ers or other plan spon sors ar e gen erally free under ERI SA, forany r eason at an y ti me, to adop t,

m od ify, or ter

minate w elf

are p lans .” Curtis s-Wright

Corp. v. Schoone

jon g en , 514 U.S. 73, 78 (199 5); see Bellas v. CBS , 221 F.3d 517, 522 (3d Cir. 2000) ( “ERISA neithe r mandates the creat ion o f pension plans nor in generaldictates the benefits a plan mu st a fford once creat ed.”)

. How ever, “ER ISA re qui res tha t all employe e bene fit plans be ‘est ablis hed and main tain ed pursu ant to a w ritte n instr um ent,’ 29 U.S .C. § 110 2(a )(1) . . . .” Ryan by Capri a-Ryan , 78 F.3d at 126. Thus, “[t]hi s sect ion pr ecludes oral or informalame ndm ents to employe e bene fit plan s.” Con fer v. Cu stom E ng’g , 952 F.2d 41, 43 ( 3d C ir. 199 1) (ci ting Hozier v. Midw estFastener s, I nc. , 908 F.2d 1155, 1163 (3d Cir. 1990)). Although the Su pr eme Court has es tabli shed a de min imu s stand ard fo r com plianc e w ith ERI SA, see Curtis s-Wright , 514 U.S. 73, the plan must identify

the pers on who has the autho rity to ame nd th e pla n , and ame ndm ents must be conductedaccordi ng to f or mal procedur es. 29 U.S. C. § 1102. 5 “[ W] hatever le vel of spec ific ity a company ul ti ma t ely chooses, in an amendment procedu re or elsewhere, it i s bound to that le vel. ” Curtis s-Wright , 514 U.S. at 85. Thus, an ame n dm ent is ine ffec tive if it is incon sis tent with th e gov ernin g instruments. Delga s so v. Sprang & Co. , 769 F.2d 928, 935- 36 (3d Cir. 1985 ); see Confer , 95 2 F.2d at 43 ( “Only a for mal writt en a m endment, exe cuted i n accordance with the Plan’s own procedu re for am endm ent, could chang e the Plan.”).

As a thres hold matt er, Depenbroc k

5 The p erti nen t p ro vi si ons of 2 9 U. S. C. § 1102 provide: (a) Named fiduci aries (1) E very em ployee b enefit plan shal l be est ablis hed and m aintain ed pu rsuan t to

a w ritten instr um ent. . . . * * * (b) Req u isi te feat

ures of plan: E very

employe e benefit plan s hall--

* * * (3) pro v ide a proc edure for amending such plan, and for identi fyi ng the pers ons who have autho rity to amend the plan, and (4) specify

the basi s on which payme nts are mad e to and from the pl an.5

cl ai ms that CIG NA ’s CEO lacked autho rityto amend th e p lan . A lte rn ati ve ly, Depenbrock conte nds th at eve n if the CEO

was authori zed to amend the pl an, he fail ed to comply

with CIGNA’s ow n writt en amendment procedure s so that the amendment was not effect iv e until December 21, 1998, t he da te when CIG NA final ly

executed r evised f

or mal plan documen ts in accor dance with t he amendment procedure s etforth in the plan. Because the am endm ent’s e ffec tive da te

came twenty-t

wo days after

D epenbrock

was reh ired , D epe nbrock conte nds the adverse amendment does not ap ply to hi m.

CIG NA counters that its CEO was duly authori zed to amend the plan and h e di d so pursuant

to the doc tri ne of rati ficat ion. According to C IGNA, althoughthe plan amendment was not form ally adop ted until De cember 21, 1998, the CE O’s approval on November 4, 1997, of a summary of t

he proposed “ cas h balance” pension formula a nd “R ehire Ru le,” coupled with his subsequent cond uct, effected a

retr oacti ve rati ficat ion of the pla n am endm ent to be effecti ve January 1, 199 8. A ccord in gl y , C IGNA cla ims that t

he “Rehire Rule ” w a s effective as of

th e da te speci fied for t he amendment – Ja nua ry 1, 19 98 – and applie d to Depenbrock be cause he resi gned on Ja nu ar y 2, 1 99 8, o ne da y after the al leged effec tive date of the rule. We first address the C EO ’s autho rityto amen d. As a thre s hold determ inati o n, we agree with t he Distr ict Cou rtthat the CE O w as au thorize d to amend the plan and adopt the “ R ehire Ru le.” Sec tion 16.1 of t he CIGNA plan specifi ed three met

hods for amendm e nt: 1) a re solution of the Board of Directors; 2) a reso lutio n of the People ’s Resource s Committee of the Bo ard o f D ir ec tors (“PRC ”); or 3) a wri tten instrument approvedand executed by one o r mo re duly au th or iz edof

fi ce rs of CIG NA. On July 23, 1 997 , the PRC adopted a resolu tion au thorizin g the C EO to: adoptamendmen ts to the CIG NA PensionPla n . . . to be effective January

1, 1998 (ora late r date i f deemed appr opriate by t

he CEO), as necessary or ap prop riate to .

. . [c]hange the Plan’s current “finalaver ag e p ay” bene fit accrua l formula t o a

“ cash balance” for

mula f o r all eligi ble part icipa nt s underthe Plan except those who (1) are c urren tl y
accrui ng benefit s under the form ula in effect o n December 31, 1988, and (2) whose combined a ge plus years of cred ited s erv ice . . . is 45 or mor e as of De cem ber 31, 199 7 . . . .

This resolu tion ga ve th e C EO plenary

au thority to amend the pl an from a “final average pay” to a “cash bal ance” formula

. The exception provided for long-term employe es does not ins ulate them from the CE O’s decisi on-making autho rityso much

as clarify that long-term employe es are not subject to the pl an ch an ge s. A cc or di ng ly,6

we conc lude th at the C EO had a utho rity to ado pt th e “R ehir e R ule” am end me nt. However , the CEO did n ot exercise his authori ty

to amen d th e plan until December 21, 1 998 , t h e date t he writt en amendment was exe c uted a nd f orm ally adopted. ERISA sp ec ifies tha t a valid amendment can only

be made in the

manner s pe cified in the p lan do cum ent. Cu rti ss-W rig ht , 514 U.S. at 85

. R egardless of the method s pecifi ed f o r
ame ndm ent, h ow ever, a n ind ispen sable requir ement under ERISA fo r effecti ve plan ame ndm ent is that t he amendment be in wr iting

. See Ho z ier , 908 F.2d at 1163 (citing Na chw alter v. Chr istie , 805 F.2d 956. 960 (11 th Ci r. 1986) ( “ERISA preclude s oral modif

icat ions of employe e bene fit plans.”)); Pizlo v. Bethlehem Stee l Corp. , 884 F.2d 116 , 120 ( 4th Ci r.1989) (stating that “ informal ” or “unauthorized” modificat ion of pe nsio n plans i s “imperm issible” under E RISA ); Degan v. Ford Motor Co. , 869 F.2d 889 , 895 (5th Cir.1989) (“ERISA mandates that [a] plan itself a nd a ny chan ges m ade to it [are] to be in w riting.”); M usto v. Am. Gen. Corp. , 861 F.2d 8 97, 910 (6 thCi r. 198 8) (“ [A] writte n employe e benefit plan maynot be modi fied or super ceded b y ora l undertak ings on the partof th e employer.”), cert. denied , 490 U.S . 1020 (1989); Moore v. Metro. Lif e Ins. Co. , 856 F.2d 4 88, 4 92 (2d Ci r. 1988) ( “[A]n ERISA welfare plan i s not subj ect t o amendment

as a r es ult of informal communications between the e mployer an d pla n beneficiari es.” ). The CEO did not s ign a writt en instrumentamending the pl an until Dece m ber21, 1998, more than three weeks after Depenbrock had been rehired. Thus, December 21, 1998, is the effective date of the am endm ent. How ever, this does not resolve the iss ue, for we must considerw hether the doct rine o f ratificatio n , ur g e d by CIG N A , retroac tively rendered

the amendment and “Reh ire Rule” effe cti ve as of Januar y 1, 199 8. B. Retroact ive Rati ficat ion The doctri ne of

rati fication provide s that an im prop erly authori zed amendment may be rati fied ex post by subsequent acts. See Curtis s-Wright , 5 14 U

. S. at 85. Mo reover, a vali dly accomplis he d rati ficat ion ordinarily

must be gi ven retr oacti ve effect, rendering the ratifie d acti on valid a s of

the origi nal deci sion date. Schoonejongen v. Curtis s-Wright , Nos. 92-5695 & 92-5710, s lip op. at 3 (3d Cir. Aug. 30, 199 5). However, rati ficat ion is prohibi ted wher e the amendment retroac tively reduces the inte rven ing righ ts of third p artie s, such as plan parti cipants. See Curtis s-Wright

v. Schoonej onge n , 1 43 F.3d 120, 124-25 ( 3d C ir. 1998) (on remand) (rej ecti ng ex pos t rati fications that defeatinterve ning rights); Confe r , 952 F.2d at 43 (hol ding that an am end me nt limi ting e l igibility can o perate only prospe ct ively); 2A W illiam Fletcher, Fletche r Cyclop edia of

the L aw of P rivate Corporati ons § 782 , at647-48 (per m. ed.

rev. vol. 19 92) (“ Ratif

ication cann ot relate back so as to de feat i nterv ening ri ghts of strangers to the transa ction.”). In the ins tant c ase, t he Distri ct Co urt conclud ed that the D ecemb er 2 1 , 1998, date of for

mal adopti on is not

fatal to the ad optionof the amendment t o the7

“Re hir e Rule” as of January 1, 1998. According to the Dis tri ct Cour t, the CEO “manifest ed his i ntent” to amend the “Rehi re Rule,” eff

ecti ve January

1, 1998, byhi s a pp ro va l o f a su m m ar y of th e proposedamen dment o n Nov emb er 4, 199 7. Furth ermo re, the C EO ’s actio n s subsequent

to h i s app rova l ostens ibly “consti tuted a ratificatio n of th e amendm en t bot h ex pre ss an d im plied .” The District Court ci tes as p roof the following subsequent

conduct: the CE O’s failure to vo ice op posit ion t o the “R ehire Rule” desc ribed in the “S ignatu re Be nefits Retire ment Kit” distribut ed to partic ipants in December, 1997; t

he C EO’ s failure to object to the “ Reh ire Ru le” de scribe d in th e Summary Plan Descripti on that was generat ed for the Ne w P lan in O cto be r, 1998; and the CE O’s express e xecuti on of the form al a me ndment to t he plan on De cem ber 21, 1 998

. Un f ortun ately for CIGNA, the Distri ctCourt’s reliance on the doctrine of rati fica tion is mi splaced be caus e rati ficat ion woul d effect a r etroac tive reducti on of Depenbrock’s accr ue d benef its und er the O ld Plan . Give n th a t the ame ndm ent w as no t form ally adopted until Dec e mber 21, 1998, Depenbrock acquire d rig hts in the interval befo re affirmance – namely , the right to rece ive bene fits underthe Old Plan – and retained his righ t to ac cru ed b ene fits, i n stead of ha v ing to settl e for the more modest bene fits p ro vided under t he New Plan. Because rati ficat ion of the amendment as of Nove mber 4, 199 7, w ould unlaw fully depri ve Dep enbrock of interv enin g subs tanti al bene fits, ratific ation i s ineffec tive. CIG NA argues nonetheless that t he amendment did not redu ce De penbro ck’s then-a ccr ued benefit s under the plan because Depenbrock worked fo r o nl y a short period in 1998 before the amendment bec ame effecti ve on December 2 1, 1998. Because De pen br oc k w or ke d o nl y a fract ion of the y ea r, C IGNA contends he did not amass t

he 1,000 work hou r s needed t o accru e a year o f serv ice cre dit underthe Old Pla n. Because Depenbrock allege dly accrued no se rvice c redit under the Old Plan, retr oacti ve appli cati on of the “cash balance” for mula to hi s servi ce following his re hi re did not r educe any accruedben efi t. As s uch , CI GNA cl ai ms t here is nothing unlawfulin subj ecti ng De pen bro ck to the “ Re hire Ru le.” Even if we we re som ehow to conclude that e xcluding Depenbr ock from the Old Plan was not a r etroac tive reducti on of benefit s, CIGNA’s argument fails be caus e i t wrong ly assumes that CIG NA could transfer Depenbrock out of the Old Plan and into the New Plan withoutef

fe ctuat ing anothe r formal pl an
ame ndm ent. CIG NA conte nds th at eve n if the amended plan w ere no t prop erly adopteduntilDecember 21, 1998, CIG NA could leave Depenbrock in the Old Plan for twenty-t

wo days, and th en tran sfer h im to the New Plan on December 21, 1998, the effective date of t he amen d men t. How ever, CIGNA overlooks that it wo uld ha ve no authori ty

upon which to transfer Depenbrock with o ut effect uating another formal plan amendment, whi ch it did not do. Moreover, CIGNA’s assert ion that8

the ame ndm ent did n ot reduc e Dep enbrock ’s accrued b enefits is pre mise d

on an unsubstantiated inte rpret ation o f ER ISA’s “Anti-cut

back” ru le , 2 9 U. S. C. § 1054(g ). 6 T he “A nti-cutb ack” rule proh ibits a pl an a me ndm ent f ro m decre asing a parti cipant 's “ ac crue d benef it s.” Id. ; see, e. g. , Cent. Laborers’ PensionFund v. Heinz , 21 4 S. Ct. 2230, 2237 (200 4); Bellas , 221 F.3dat 522 (“ [A] plan amendment that

retr oacti vely

reduced bene fits promised t o p l aintiffs for almost

seven yea rs w as pr ec ise ly the s ort of inequ ityCongress desi gned ER ISA to prevent.”). ERI S A defines “accr ued bene fit” as an indi vidual' s right to a retirementbenefit

“deter mined u n der the plan

. . . expresse d in the f orm of an annual bene fit commencing a t normal retirement age .” 29 U. S. C. § 100 2(23 ); see Berger , 911 F.2d at 917. CIGNA constr ues “accruedbene fit” na rrow ly to mea n pu rely a dollar amount of benefi ts. According to this inter pretation, retr oactiv e am endm ents to a plan are p erm issible so long as t he dollar amount of accrue d b enefi ts i s not reduced. CIGNA clai ms – which Depenbrock disput es – that trans ferri ng Depenbrock to the New Plan does not reduce his dol la r amo unt o f ben efits because the benefi ts he earned under the Old Plan were converted into an opening account bal ance in t

he New Plan. 7 Rega rdl ess of the meri ts of Dep enbrock ’s challenge to C IGN A’s

asse rti on, CIG NA’ s argu men t fail s because it i s predi cated upon a pr oposed trea sury regu lation th at is not yet th e la w

. Se e Prop. Tre as. Reg. § 1 .411(d)-3(a)( 4) , Exam ple 2, 69 F ed. Reg . 13769 (M ar. 24, 2004) (propos ing to reinterpr et the “A nticutback” rule so as to lim it th e protec tion of accrued benefits t o purely a do l lar

amou nt). Alth o ugh the Treas ur y Depart me nt ret ains inter

pretive jurisdictio n
overthe “ An ti-cu tbac k” r ule, see 43 Fed. Reg. 47713 (Oct. 17, 1978), “a proposed

r egul ationdo es no t re pr es en t an ag en cy's consider ed inter

pretation of its statu te . . . .” Co mm odity Fu tu r es Trading Com m’n 6 29 U .S.C. § 105 4(g) p rovid es in releva nt part: (1) The accr

ued benefit

of a part icipant under a plan may not be decrease d by an

am end me nt o f the plan

. . . . (2) For pu rposes of

paragrap h (1), a plan amendment which has the effect of-- (A) e limina ting or r educ ing an early retirement benefit or a r etirement-type subsidy (as defined in regulations), or (B) eli minati ng an optiona l form of bene fit, with respe ct to be nefits attributabl e to ser

vice befor e the amendment shallbe treated as r educing

acc rue d be nefits. . . . 7 Dep enbr oc k ma inta in s t ha t C IGNA credit s the i niti al “cas h balance”

acco unts o f rehire d em ployees lik e him with less tha n the f

ull valu e of th eir prev iously earn ed an nuities. A s a resu lt, he clai ms employee s star t with l ower benefits for purposes of the “cash balance” formu la than they had be fore and it takes y ears for

rehir ed employ ees to ca tch- up w ith w her e the y beg an.9

v. Schor , 478 U .S. 833 , 845 ( 198 6); see, e.g. , Ca. R ural Lega l Assistance, In c. v. Le gal Servs. Corp. , 917 F.2d 1171, 11 7 3 n.5 (9 th Cir . 1990) ( “We decline t o take

c o gnizance of the propos ed regulation how ever, because ‘a propose d re g ulati on does not repres ent an agency's c onsider ed inter pretation of

its sta tute . . . .’”) (quoti ng Schor , 478 U.S . at 84 5). Un til the propo sed treasury regulation becomes law, t he current regu lati ons govern. 8 The curren t regulations, 26 C.F.R. § 1. 411(d)-3(b) , 9 proh ibit plan ame ndm ents that “ directly or indi re ctl y” affect ac crued benefi ts. “Plan provisi ons indir ectl y affe cting accrued bene fits inclu de, for example, provisi ons relating to years of

servic e and break s in servi ce for dete rmin ing ben efit a ccru al . .

. .” Id. Beca

use CIGNA’ s a me ndmen t adop ts th e “Re hir e Rule” that “direc tly

or in di re ctl y” affect s the cal culat ion of ben efit s, the am endm ent as a pplied to Depenbrock is pr ohibit ed. Even if Depenbrock had been notifi ed of the propos ed “Rehire Rule ” by the “Signature Retire ment Benefit s Kit” –

as CIGNA urge s – such noti ce was insuffi cient

to have i mplemented the amendment

becaus e ERISA provides that

ame ndm ents to a p lan m ay o nl y o ccur if made in w riting

. See supra Par t II.A

. The writt en am en dm en t, a s p re vi ou sly s tat ed,

was not exec uted untilDecember 21, 1998. Thu s, December 21, 1998, i s the effe ctive date of the amendment

. Dep enbrock ’s parti cipat ion in t he 8 We note that a s of June 28, 2004, the proposed treasur

y r egulat ion redef

ining “Protect ed Benefits ” – Secti on 411(d)(6) (BIN 154 5-B C2 6) – h as pro gresse d to the “Fina l Rule Sta ge.” See 69 Fed. Reg. 379 76. Howe ve r, it

is st il l n otth e l aw.

9 26 C .F.R. § 1.411 (d)-3(b ) prov ides in releva nt part: Under secti on 4 11(d )(6) a p lan is not a q ualif

ied plan (and a trust forming a part of

such plan is not a qualif iedtrust) if

a plan amendment decrease s the accr

ued be nefit

of anyplan participant, unless the plan

amen dme n t satisfies th e requ ireme nts of secti on 412(c)( 8) (rel atingto certain ret roactive amendm ents) and t he regulations t hereund er. For purposes o f determ in ing whether or not any pa rtic ip an t's accrued b enefit is decrea sed , all t

he provis ions of a plan affe cting d irectly or ind irectly the comp utati on o f acc rued bene fits which ar e ame nde d wi thth e s ame adoptionand e ffec tive da tes sha ll be treat ed a s o ne pla n am endm ent. Plan provisi ons indirec tlyaffecting accruedbene fits inclu de, fo r
exa m ple, prov isions re lating to years of servi ce and break s in servi ce ford eterm ining b enefit

accru al, and to actuarial factors for determi ning optionalor ear l y retirement benefit s.10

Old Plan shoul d ha ve r es ume d imm ediate lyupon his re t urn t o work on November 30, 1 998

. And his participation shou ld have co nt inued until eithe r his employment

ended or the terms of parti cipat ion in the Old Pl an were alt ered bya prospective a mend men t exec uted in accordance wit

h CI GN A’ s speci fied procedures. Having det e rmined that the amendmen t adver sely

affects Depenbrock, we do not reac h the question of CIG NA ’s compliance with E RISA’s notice and disclo su re requir ements, the val idit y of Dep enbrock ’s failure -to-pro duce claim againstCIGNA , or t

he co rrect

ness of the Distri ctCourt’s f

inding of attor

ney- cl i ent privi lege. IV. A cc or di ng ly, for the r eas ons set forth abov e, t he su mm ary judgm ent in favorof CIG N A Corporation wil l be

revers ed an d the case remanded to t he Distri ctCo urt w ith direc tio n to enter

summ ary judg men t i n f avor of John Depenbrock. Co sts taxe d a ga in st CIG NA.